India, the world’s largest exporter of rice, recently implemented a ban on exporting non-basmati white rice to stabilize domestic prices and ensure food security.
This ban was followed by additional restrictions, including a 20% duty on parboiled rice exports.
Rice serves as a staple food for over three billion people globally, with India contributing approximately 40% of global rice exports.
Global Concerns
Economists caution that this ban is part of a series of disruptions in global food supplies, caused by events, such as Russia’s invasion of Ukraine and weather phenomena like El Niño.
They express concern that the Indian government’s decision may have significant market repercussions, particularly impacting vulnerable populations in countries of the Global South.
India’s ban on exporting non-basmati white rice has caused panic buying in the United States and led to a steep increase in rice prices.
The ban does not apply to basmati rice, which is India’s premium variety. Non-basmati white rice makes up about 25% of India’s rice exports.
This export ban, coupled with Russia’s withdrawal from the Black Sea grain deal, which is a crucial pact that allowed the export of grain from Ukraine, has raised global concerns about the availability of grain staples and the potential for food shortages.
Chain Reaction
India’s ban on non-basmati white rice exports has led to a surge in rice prices in Nepal and Vietnam. Thailand, the second-largest rice exporter, has also witnessed a significant increase in domestic rice prices.
Meanwhile, countries like Singapore, Indonesia, and the Philippines have requested India to resume rice exports.
The International Monetary Fund (IMF) has advised India to remove the restrictions, warning that it could worsen food inflation uncertainty.
Economists warn that the ban may prompt rival suppliers to take similar actions, causing further disruptions in the world market.
Philippines’ Vulnerability and Challenges
The Philippines heavily relies on rice consumption, with each person consuming an average of 118.81 kilograms per year. However, the country’s self-sufficiency in rice production is only 81.5 percent.
In 2022, the Philippines imported 3.79 million metric tons of rice, mainly from Vietnam.
India’s recent decision to stop exporting rice is expected to impact global and local food prices, particularly due to ongoing flooding that’s affecting rice fields in the Philippines.
This situation is worrisome for the Philippines, as it’s identified as the most vulnerable among emerging Asian countries to rising food and energy prices.
The country’s vulnerability stems from its reliance on food imports, particularly rice, and its lack of subsidies, which means higher oil prices directly impact consumers.
Moreover, due to its status as a significant net energy and food importer, the Philippine peso is also at risk as one of the most vulnerable currencies in the region.
If food and energy prices rise by 20 percent by the year’s end, the Philippines’ current account balance is projected to deteriorate further.
Source: PhilNews24 | August 30, 2023
